India’s Travel Boom: Why Vacations Have Become the Nation’s Top Reason for Personal Loans

India’s relentless passion for travel has sparked a new financial trend—travel loans have now overtaken home renovations and even medical expenses as the leading reason for personal credit. In a dramatic shift reflecting evolving consumer aspirations, Indians are embracing credit-fueled adventures, prioritizing leisure and lifestyle over traditional big-ticket needs.

Key Insights into the Travel-Loan Surge

Travel Now Tops Borrowing Motives:

According to a major Paisabazaar study surveying over 5,700 people across 97 cities, 27% of personal loan borrowers in the first half of 2025 used their loans to fund vacations. This marks a significant rise from just 21% two years ago and places travel ahead of home improvements (24%), credit card repayments (11%), medical expenses (9.6%), education (6.1%), and weddings (5.4%) as the main reason for seeking credit.

A Nationwide Movement:

The travel loan phenomenon is not just an urban story. Demand for travel loans is surging in tier-2 and tier-3 cities, which together account for 71% of all applications in early 2025. This broad-based trend signals that aspiration-driven spending is no longer the preserve of India’s metros.

A New Generation of Borrowers:

Millennials still represent the largest consumer group for holiday loans, making up nearly half of all borrowers. However, the fastest growth is coming from Generation Z: their share of holiday loan applications has more than doubled since 2023, now reaching 29%. These young, digitally native, and ambitious Indians are leading a new wave of credit-enabled leisure.

Travel at the Heart of Outward Spending:

As more than 3 crore Indians ventured overseas in FY24, and RBI data confirms that outward remittances for foreign travel touched approximately $17 billion in FY25—representing more than half of all outward money transfers. This underscores just how central travel has become to the modern Indian lifestyle.

What’s Driving This Shift?

Digitally-Savvy Consumers:

The report calls out a “new-age” traveler—digitally adept and keen to spread out the cost of experiences through convenient financing.

Shifting Aspirations:

There’s a visible pivot among Indian families and individuals toward spending on experiences and personal fulfillment.

Financial Sector Innovation:

Easy-to-access, digitally processed travel loans have empowered more Indians to make their dream holidays a reality—no matter where they live.

The Big Picture for Travel Brands and the Industry

This sweeping change marks a watershed moment for India’s tourism and travel finance sectors. Travel brands, hospitality providers, and financial institutions now have a unique opportunity to collaborate—offering tailor-made loan products, bundled travel packages, and digital-first experiences that resonate with a consumer base hungry for discovery, ease, and flexibility.

For Indian travelers, the world is truly within reach—sometimes at the click of a button, and increasingly, with a financial plan that matches their dreams.